Edwards Lifesciences Corp Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Larry Biegelsen - Wells Fargo Securities, LLC - Analyst : Good afternoon. Thanks for taking the question. Scott, I guess maybe help us bridge the Q4 guidance implies about $2.20 on an annual basis, just using the midpoint times four. Can you bridge from the prior guidance of $2.75 at the midpoint? Did it only change for Critical Care, which we thought was always going to be $0.40 diluted? Seems like something else changed, and I had one follow-up.

Question: Larry Biegelsen - Wells Fargo Securities, LLC - Analyst : That's helpful. And then, just a follow-up on that side --

Question: Larry Biegelsen - Wells Fargo Securities, LLC - Analyst : Okay. I mean, that was my follow-up, Scott. I mean, I know you anticipated the question. Just using that Q4 EPS of $0.55 at the midpoint, people are going to multiply and get to $2.20. How should we think about that in the context of 2025 EPS? You gave some helpful color on the operating margin. Is there anything else we should consider when we're trying to kind of model 2025 here?

Question: Vijay Kumar - Evercore ISI Institutional Equities - Analyst : Hi, guys. Thank you for taking my question. Scott, maybe if I could go back to this Q4 guidance assumptions, I think you called out a few line items on TAVR between the hurricane, China. Could you parse out what the impact of hurricane, I'm assuming we've already seen some impact, and what was China? Is this just one timer on China? Could there be some lingering impact as we think about next year? And based, I know you said lesser days versus

Question: Vijay Kumar - Evercore ISI Institutional Equities - Analyst : Understood. And then maybe one more related to the guidance here. What is the implied operating margins here for Q4 when you look at the EPS and the revenue sales dollars? Is that something like mid-25s? And I'm just trying to think what is the right run rate here on operating margins as you get the benefit from right-sizing expense line item? And sorry, back on the days -- on a year-on-year basis, was it consistent or did the year-on-year basis change?

Question: Vijay Kumar - Evercore ISI Institutional Equities - Analyst : Sorry, on the days -- fourth quarter days versus fourth quarter '23. I was looking on a year-on-year basis on the days common.

Question: Robbie Marcus - JP Morgan - Analyst : Thanks for taking the questions. I'll switch it over to some of the products. TMTT again came in better than expected. We've seen from your competitor a nice quarter on the repair side. I was wondering if you could talk about on tricuspid repair specifically. I was wondering if you could talk about your tricuspid replacement and how you're seeing doctors choose in the market which patients are appropriate for which and the decision making process.

Question: Robbie Marcus - JP Morgan - Analyst : Great. Maybe just as a quick follow up on TAVR, you've now had three more months to kind of evaluate the market and really dig into the capacity issue. And I'm asking this more from a market perspective because none of your competitors validated a capacity issue. And so, when you see it, I imagine that you're one of the biggest in the structural heart lab. So I imagine you probably have the best view. But how are you thinking about capacity here? Is it more of a TAVR volume issue versus capacity? I know the market is still substantial from a top-down basis, just because we don't hear anybody else validating the capacity. So I'd love to get your thoughts there on what you're seeing on the ground. Thanks a lot. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 9:30PM, EW.N - Q3 2024 Edwards Lifesciences Corp Earnings Call Larry Wood - Edwards Lifesciences Corp - Corporate Vice President and Group President, Transcatheter Aortic Valve Replacement and Surgical Structural Heart Sure. Thanks, Robbie. This is Larry. Yeah. It's something we spend a lot of time on in the quarter. We spend a lot of time with hospital administrators and with our physicians in the field. And I think one of the things to just think about is given our market position overall, we're more dependent on market growth than any of our competitors are. For people that are coming off small bases, if they pick up a little bit of share or a few cases here and there, they don't really necessarily see the capacity constraints in the same way. I also think you just have to look at all of the new technology in the last couple of years that's coming to the [Cath Lab] space. And frankly, we're part of the problem. As Daveen's growing and bringing in new products like EVOQUE, and we see continued adoption of PASCAL, and you see adoption of other technologies, it's just putting tremendous pressure on the structural heart teams to be able to prioritize patients and to move patients around. Now, we've been very encouraged in our discussions with administrators that they see this as being a long-term growth part of their hospital systems, which means they know I think are starting to realize just not that they're going to have to add some capacity, but they're just not going to be able to move resources around to be able to address the patient needs. So we have heard of hospitals that are now specifically investing in their structural heart space so that you can meet these needs. But it's a little bit different by hospital. There's some places that maybe the constraints are a little bit more physical constraints with rooms than in other places. It's more just a staffing issue, and they can prioritize it. But one of the reasons we brought together a lot of administrators is so that they could share best practices for how they're trying to manage all of the challenges that they have and try to move that forward. And we'll continue to do that, until this gets resolved. But that's kind of an update on where we are. But one thing I will stress is it's not a shortage of patients. I think we do see backlogs growing. We say time to treat is increasing for our TAVR patients. And that's just the other issue that we have to address because we know these patients don't wait well. Bernard, do you have anything to add just as a broader company?

Question: David Roman - Goldman Sachs - Analyst : I wanted to start on just laying out some of the pieces here post TCT. And I appreciate that we won't see the data until next week. But as you think about the subsequent activities that would take place either on the asymptomatic patient population as it relates to label expansion or additional patient activation efforts, what happens next there? And maybe you can kind of talk through some of the dynamics on the tricuspid side as well, appreciating here that the FDA has already approved EVOQUE and NCD is already underway, and you have the NTAP to support adoption. But maybe help us think about the activities that happen subsequent to TCT, and then when we should realistically expect to see a benefit of that flow through the business assuming positive outcomes in these studies?

Question: David Roman - Goldman Sachs - Analyst : Okay. And then maybe just a follow-up on the P&L here and understanding that we'll get the guidance in December. But the 27% to 28% operating margin as a starting point implies flattish year-over-year. So is conceptually the right way to think about that, Scott, that the actions you've taken here to right-size the company effectively help you fund the incremental investments associated with the acquired assets, and that that forms a new base of operating margin off of which we can see expansion longer term? And then maybe just, Daveen, to clarify can you just describe the interplay between the NCD and the NTAP post Q1 of next year?

Question: Travis Steed - Bank of America - Analyst : Hey, thanks for taking the question on. Just wanted to clarify the 27% to 28% op margin. Does that includes the JenaValve the deal that hasn't closed and includes kind of everything, the cost savings? And it seems like that's like [$240 million, $250 million] in earnings range. I don't know if there's a floor or you'd like to comment on that for the EPS side?

Question: Travis Steed - Bank of America - Analyst : That's fair. I don't know if there's any way to quantify the JenaValve addition on that 27% to 28% op margin, but that's going to be the follow-up. But the other question I was going to ask was the 5% to 7% TAVR growth that you've kind of been at this year, is that the way to think about kind of your ongoing steady state? Or do you think there's kind of catalyst that could reaccelerate that going forward? Just trying to think about like bigger picture how you're thinking about the TAVR opportunity for Edwards.

Question: Matt Taylor - Jefferies - Analyst : Hi. Thanks so much for taking the question. So I want to ask about the results, but I just want to ask about the timing of impact. If these trials are positive next week, how quickly do you think you could see some positive lift on TAVR and or TMTT from early TAVR and the tricuspid results?

Question: Matt Miksic - Barclays - Analyst : Hey, Thanks so much for taking the question and for the color on 2025. I just wanted to maybe ask Scott, I'm not sure if I missed it, but I appreciate the color on the operating margin. Wondering if at this stage, you're ready to say anything about the gross margin, FX related or otherwise.

Question: Joanne Wuensch - Citi - Analyst : Good evening. Thank you so much for taking the question. I'll put them both at the front. Can you quantify the one-time impacts for the fourth quarter for TAVR? It seems like that's causing a little bit of confusion as people are thinking about how that's progressing sequentially. And then my second question has to do with products. I haven't heard you here or talk about for M3 for mitral replacement in a while. And I don't know if you can just give a little bit of update on the timing of that or when we might see anything incremental. Thank you.

Question: Danielle Antalffy - UBS - Analyst : Hey, good afternoon, everyone. Thanks so much for taking the question and congrats on a good quarter considering everything. Just a quick question on how we should think about the competitive dynamics. And particularly in the US, we'll see some competitive (technical difficulty) next week, we might see a fourth valve come to market. Would love to hear and appreciate you guys have said today your share is stable, but how you're thinking about the future? And even the receptivity so far with three valves of centers for taking on a third valve, who's losing share to that third valve? And also, the pricing dynamic -- sorry, that was a lot, but that's my only question. Thanks so much. Larry Wood - Edwards Lifesciences Corp - Corporate Vice President and Group President, Transcatheter Aortic Valve Replacement and Surgical Structural Heart Hi, Danielle. Maybe I'll start, and then I'll let Bernard comment on just kind of broader company aspects. We do charge a premium for our platform. We believe our S3 UR represents absolute best-in-class technology and best-in-class performance. It takes all of the things that we've always loved about SAPIEN 3 Ultra but added our RESILIA tissue which we have a deep history with from our surgical business. So we think our platform deserves the premium that we charge globally. I think we always think carefully about competition. We have deep respect for our competitors. But I think when you look at the body of evidence that we've put on the table through our clinical trials, you look at things like PARTNER 3, 99% of our patients were alive and well at a year. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 9:30PM, EW.N - Q3 2024 Edwards Lifesciences Corp Earnings Call You look at five years, 90% of our patients were still alive. We think that the technology but also the clinical evidence support our best-in-class premise. But it's our responsibility and it's our job to make sure we're always communicating that with our customers. And it's not just about the price of the device, it's the value we bring to their system. And we just simply think that we offer the best there is in lifetime management of these patients and also running a very efficient TAVR program in terms of procedure time and predictability and discharge. But it's our job to continue to make that case, and I think it's about us being able to do that and execute at a high level.

Question: Patrick Wood - Morgan Stanley - Analyst : Beautiful. Thank you. I just had one quick one to follow up on that, which was for TAVR -- can I get a sense -- but could you maybe give us a sense of how you're seeing growth in some of the larger centers relative to the smaller? I'm thinking about the commentary about where EVOQUE and PASCAL have been rolling out and the disruption from that. So for the smaller programs, have you seen a different kind of growth profile than what you've seen in the larger? Larry Wood - Edwards Lifesciences Corp - Corporate Vice President and Group President, Transcatheter Aortic Valve Replacement and Surgical Structural Heart This is Larry. That moves around a little bit quarter-to-quarter. I will say that the larger academic programs are the ones that are most likely to be adopting the new therapies and really putting more focus, and those are oftentimes places that are closer to their capacity wall. So we maybe see a little bit of impact in those larger academic programs that are on the forefront of utilizing these new technologies. But it's hard to generalize. We have probably close to 850 centers in the US and to a degree, they all have different challenges. But broadly speaking, I think the large academic centers were the early adopters is probably where we feel a significant amount of the pressure. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 9:30PM, EW.N - Q3 2024 Edwards Lifesciences Corp Earnings Call

Question: Adam Maeder - Piper Sandler - Analyst : Hi, good evening. Thanks for taking the questions. I'll keep it to one. I wanted to ask about EVOQUE and specifically the NTAP that went into effect on October 1. I'm just wondering if you've seen any kind of noticeable impact to uptake in the past couple of weeks. How do you think about the impact of improved reimbursement going forward? And then the second part of the question is just on the 56 millimeter valve size, now that that's FDA approved, just curious how big of a patient population does that valve size serve? Thank you.